State, County On Track For Historic Drilling Year

Bobby MagillFort Collins ColoradoanJuly 11, 2010

As the rhetoric about Colorado's controversial new oil and gas rules heats up with the state's gubernatorial race, Colorado and Larimer County are on track this year for one of the most active drilling years in their history.

In Larimer County, 2010 has already brought more state oil and gas drilling permit approvals than any previous year except 2008.

Rules signed by Gov. Bill Ritter in 2009 requiring a measure of state environmental oversight to oil and gas drilling are the subject of intense debate in the gubernatorial race even as the Colorado Oil and Gas Association takes a cautious approach to the rules.

Republican gubernatorial candidate Scott McInnis is calling for the repeal of the rules because they're "job-killing," he said in a statement Wednesday. He said the "onerous" rules overreached, destroyed jobs and sent the industry to other states.Denver Mayor and Democratic candidate John Hickenlooper, meanwhile, said the rules should be addressed on a case-by-case basis as they apply to specific oil and gas basins, but they shouldn't be repealed or rewritten.

But since the rules became effective more than a year ago, the oil and gas industry has remained active in Colorado despite the economy.

Already this year, the state has approved more drilling permit applications - about 3,100 - than any other Rocky Mountain state and Kansas, according to Colorado Oil and Gas Conservation Commission data.

So far this year, 16 drilling permits have been approved in Larimer County, where drilling in the Wattenberg Field north of Denver has spilled across county lines near Berthoud. The record year for the county was 2008 when 46 permits were approved. The previous record was broken in 1992, when 13 permits were approved.

Weld County, one of the state's oil and gas extraction hot spots with more than 1,000 permits approved this year, is no different.

"We are on pace for the second most-active year for permitting in Weld County," said COGCC director David Neslin.

On the Western Slope, where the oil and gas industry was most concerned about the impacts of the new rules because of required wildlife protections, drilling activity is approaching levels last seen during the heights of the energy boom in 2006 and 2007, long before the rules were implemented.

In Garfield County, home to some of the state's most productive natural gas fields, 1,089 permits were issued as of June 25, putting it on pace to be the third most-active year for oil and gas drilling in the county's history, Neslin said.

Rio Blanco County, he said, could break a record this year.

Colorado leads the region in the number of new oil and gas wells drilled - 819, more than all surrounding states - and in the growth of active drilling rigs, Neslin wrote in a letter to COGCC members on June 23.

In December, the state had about 40 active drilling rigs, he said. On June 18, the number increased to 55 for an increase of about 37 percent.

That increase, he said, rivals that of new natural-gas drilling hot spot Pennsylvania, which saw a 33 percent increase in active rigs during that time.

"I don't know that we're hearing from industry that the rules are job-killing," said Thom Kerr, permit technical services manager for the COGCC. "They don't give me that feedback."

Doug Flanders, director of policy for the Colorado Oil and Gas Association, said the association has been working closely with the COGCC to increase the efficiency of the drilling permitting process.

"While permits have been on the rise and rig counts are increasing, we know issues will continue to exist, which is why we must remain diligent and continue to work closely with the commission to ensure that we continue this progress," he said.Neslin said in his letter he believes the industry's competitive performance after the rules went into effect shows that energy development can be compatible with environmental protection.

But McInnis doesn't believe the rules are so clear cut, said spokesman Sean Duffy.

"The commission is clearly engaging in a strong public-relations effort to paper over the damage the rules have done to the industry," he said. "No question the cost of doing business for these companies has increased."